Crisis bites, fraud and crime rises ?
At first glance, this seems logical: Crime rates should drop during good economic times and rise during bad ones. But there’s little evidence to suggest that good economic times have much effect on crime. Crime rates rose every year between 1955 and 1972, even as the U.S. economy surged, with only a brief, mild recession in the early 1960s. By the same token, a bad economy doesn’t always bring more crime. Crime rates fell about one third between 1934 and 1938 while the nation was struggling to emerge from the Great Depression and weathering another severe economic downturn in 1937 and 1938. Surely, if the economic theory held, crime should have been soaring.
A lot of anti crime professionals can feel it; as the crisis continues, so does fraud and some other types of crime. People are more desperate for cash. Companies are raising the bars for onboarding clients, resulting in more (slightly) fraudulent applications. But also a lot of fraud get detected in these dark times that has been in the books for years. A lot of work coming to us.
Cifas, the UK’s fraud protection body, has reported a rise in the number of fraud cases reported by its 270 member organisations, in the first three months of the year. The figure increased 10% on the same period of 2007, to 52,286. During the quarter, cases of lying on application forms rose by 13%, to 21,780. The most frequent offence was one of omission i.e. failing to disclose a previous address where an applicant had a poor credit history.
FBI Director Robert Mueller says there has been a “tremendous surge” in mortgage fraud investigations, and he expects it to keep growing. At a Senate hearing Mueller estimated that the FBI has 1,300 investigations underway, 19 of them involving sub-prime lending practices by U.S. financial institutions. That’s up from three months ago, when FBI officials said they were investigating 14 companies for possible fraud or insider trading violations. Mueller says the number of inquiries has increased to a level that required shifting agents from other projects onto mortgage fraud. The New York Times reported that losses from fraud are surging. “It’s looking like a record-breaking year already,” said Stephen Kodak, a spokesman for the FBI. Kodak said that in first half of the 2008 fiscal year, which ended last month, the FBI received nearly 30,000 “suspicious activity reports.” The 2007 fiscal year ended with 46,000 reports and 260 convictions.
But also in the physical security field we could see an increase in robberies. Today an armored truck guard was shot to death at a suburban Miami mall while making a cash pickup. Chris Swecker, a former assistant director of the FBI’s criminal division who now heads security for Bank of America, said there is logic to the theory that the economy has factored into some bank heists committed since mid-2007, when the credit crisis began. “The FBI has shared information with us where some bank robbers have cited hard times — foreclosures or credit problems,” Swecker said.
Remember what they say about bankers; they will lend you an umbrella if the weather is good but will ask it back as soon as it starts raining. Criminals will try to take your umbrella when it is raining but will let you keep it if it is dry.
http://www.bankingtimes.co.uk/30042008-application-fraud-rises-as-credit-crisis-bites/
http://chuckgallagher.wordpress.com/2008/04/21/mortgage-fraud-fbi-expects-dramatic-rise-of-unprecendented-scope-mortgage-fraud-speaker-chuck-gallagher-comments/
http://www.heritage.org/Press/Commentary/ed111500a.cfm
http://www.registerguard.com/csp/cms/sites/web/news/2217771-35/story.csp
